16. How would the balance sheet of a commercial bank stand after the following operations? The bank begins business with a paid-up capital of $300,000 and a surplus of $60,000. It discounts for customers $600,000 of four-months notes and bills receivable, at 6 per cent., the borrowers taking one third of the proceeds in cash (i.e., lawful money), and leaving two-thirds on deposit. Customers deposit $200,000, of which one-half is in cash, one-quarter is in checks drawn on this bank, and one-quarter is in checks drawn on other banks. 17. Suppose that this bank now reorganizes as a national bank and, to secure the privilege of note issue, buys United States 2 per cent. bonds of a par value of $90,000 at $102. These bonds it deposits with the Treasurer of the United States and receives the full amount of national bank notes to which it is entitled. Depositors withdraw by check $180,000, the bank giving them $45,000 in its notes and the balance in lawful money. A dividend of 2 per cent. is declared, and is paid, one-half in lawful money and one-half in the form of deposits. Present the balance sheet. CHAPTER 8 BANKING IN THE UNITED STATES BEFORE 1914 REFERENCES. _Hollander, J. H._, Security holdings of national banks. A. E. Rev., 3: 793-814. 1913. _Kemmerer, E. W._, Banking reform in the United States. A. E. Rev., 3 (no. 1, supp.): 52-63. 1913. Round table discussion of above, 64-88. _Kemmerer, E. W._, Seasonal variations in the New York money market. A. E. Rev., 1: 33-49. 1911. _National Monetary Commission_, Report. 1912. In Sen. Doc. 243, 62d Cong., 2d Sess. _Phillips_, ch. XXX. *_Source Book_, 324-336 (extract from National Monetary Commission Report), 314-323 (extract from 1910 report of the Comptroller of the Currency). _Sprague, O. M. W._, Proposals for strengthening the national banking system. Q. J. E., 24: 201-242, 634-659; 25: 67-95. 1909-1911. _United States Comptroller of the Currency_, Annual reports. *_White_, bk. III, chs. IV, XV, XVII, XX, XXI, and appendices A and B. _Willis, H. P._, The banking question in Congress. J. P. E., 20: 869-885. 1912. QUESTIONS. 1. Explain the method followed by national banks in issuing bank notes. Why did the banks often find it more profitable to use their money in other ways than by issuing bank notes? Ref.: Discussion in various reports of Comptroller of the Currency.